Because it's a loyalty ability, Sarkhan's second ability isn't a mana ability. It can be activated only any time you could cast a sorcery. It uses the stack and can be responded to.
2018-07-13
A "Dragon spell" refers only to a spell that has the Dragon subtype, regardless of its name. For example, Dragon's Hoard isn't a Dragon spell.
+1: You may discard a card. If you do, draw a card.
+1: Add two mana in any combination of colors. Spend this mana only to cast Dragon spells.
−7: Create four 5/5 red Dragon creature tokens with flying.
